For anyone who drives a car, auto insurance is a must. In fact, in the US, all drivers and car owners are legally obligated to have some form of insurance at any given time. However, insurance agents may sometimes get cancellations from their clients. Why auto insurance policy holders cancel may be a mystery to some agents - after all, unlike life insurance or even home insurance, drivers must have auto insurance. Or they risk getting heavy fines if they're stopped by law encforecement and can't demonstrate proof of insurance.
But still, it happens to many agents - they may receive a call or letter from a client saying they want to cancel their policies. In many cases, it may be an understandable decision, like in the case of people moving away or deciding to go car-free. However, there might be other reasons why auto insurance policy holders cancel. If you want to improve your services as an insurance and financial services agent and perhaps even try to persuade your clients not to cancel their policy, then you should learn the different reasons why auto insurance policy holders cancel.
Reason #1: They Think Cancellation Is The Only Option
Some clients may think that due to certain circumstances, cancellation is the only option. For example, they might be selling their car or transferring ownership to a child or spouse. Or they might be moving away to an area where you don't cover them. In such cases (as in all the cases to be mentioned here), it's always a good idea to ask why they want to cancel. Of course, your clients don't owe you an explanation, but if you've been on good terms with them, they will likely tell you why. If they think that they have no other choice but to cancel, try to find a different option for them. If they are selling their car, then assist them in transferring their policy or help them get a refund on their remaining against their prepaid amount. By offering your help, you can show clients that they might have other options aside from simply canceling. If they're buying a new or used vehicle, many car dealerships already have relationships with various insurance agents in their neighborhood. Of course, that means it's a great idea for you to have a great relationship with all the auto dealers in your city.
Reason #2: They Think They Don't Need It
In many cases, things like comprehensive and collision are not required once a car has been fully paid off. However, many car owners may mistake this as not requiring any coverage at all. However, in states like California, drivers are legally required to carry liability insurance, particularly:
- Bodily Injury Liability Coverage or $15,000 per person or $30,000 per accident minimum
- Property Damage Liability Coverage of $5,000 minimum.
While drivers who own their cars outright don't have to have coverage to protect their cars, they need to have enough coverage to pay for damages they may inflict on other people and their property while operating their vehicle if they're in an at fault accident.
So, if a client comes to you asking to cancel their entire policy because they just finished paying off their auto loan, you should try and sit down with them. Check if they understand that they are still required to carry liablity insurance, and of course, without comprehensive or collision insurance, insurance won't cover their vehicle in the cases of theft or damage.
Reason #3: They Think It's Too Expensive
Some people may want to cancel their policy, because it's simply too expensive . They may feel they can't afford it anymore. If they are also giving up their car for the same reason, then there's really nothing any agent can do about that scenario.
Of course, it's always wise to continue to sell the value and benefits of the products and services you represent. Ensure that they clearly understand how your products compare, in terms of value, to the competition in terms of what happens "after they've been in an accident." Whether they're at fault or not, show them why you're different and worth the few dollars per month more as compared to the lower priced competition. Have them call to various auto repair shops in your area to find out for themselves how strong your reputation is when handling accident claims. If pre-approved, give them the names and numbers of other very satisfied clients serviced by your agency.
Also show them other legitimate ways they can save money by "bundling" some of their other policies, that may be serviced by a competitor, when they bring those policies into your agency. Always, always, always sell value and benefits before resorting to the last ditch option of cutting their rates by slashing their benefits. More often than not, that's not the right solution for most clients.
Reason #4: They Are Experiencing a Major Life Change
Life happens, as they say. Many people go through various life-changing events. It might be the birth of a new child, marriage, or the loss of a loved one. Or of course people get promotions, demotions, and maybe even job transfers. When people are experiencing major life events, they might have to make certain decisions, and if they decide to sell a car or donate it for some reason, then it's understandable why auto insurance policy holders cancel their policies.
However, some joyous occasions may also be an opportunity to offer other services to your clients. If a client is having a baby and selling their fancy sports car for a minivan, consider giving them brochures and other information about life insurance, mutual funds, college savings plans, and other products you offer that are suitable to their situation. Clearly it's also a great opportunity to have an IFR (Insurance Financial Review) with that family, right?
Reason #5: They Are Planning to Stop Driving
Driving is a chore for many people, and owning a car has its burdens. If a client has made the decision to stop driving to cut costs or simply to help the environment, then you should graciously accept their decision. However, there may be cases that they still need their insurance, and it's good to probe and ask why they plan to stop driving.
For example, a client who owns a classic car might simply decide to store their vehicle in the garage for some time. You should remind your client that even while in the garage or parked in front of their homes, their precious vehicle could still experience mishaps like theft, vandalism, fire and falling debris. Keeping some insurance, such as comprehensive coverage, can help protect the car while in storage. Sometimes, classic car owners only take their vehicles out for exhibits and parades and think that they don't need insurance. However, since the car is running on a road, they should definitely have insurance. See if you are able to offer a discounted price for occasional driving or even an "exhibition auto" policy, so your client doesn't drive off without at least the minimum coverage your state's laws require.
Reason #6: They Are Unhappy With Their Current Provider
Some clients simply may not be happy with the service that your agency has provided and cannot be dissuaded from canceling their policy. Of course, if this should happen, then perhaps it's time to look at your agency and see where the problem lies. It may be a misunderstanding and you might have many other happy clients, but if current customers are leaving in droves, then you should look internally and see if you can improve your service by offering your team members additional training and development.
Why auto insurance policy holders cancel is an alarming question that some agents may be asking themselves. Most of the time, it could simply be a misunderstanding which you can easily fix. While other times, there are circumstances beyond anyone's control. A good agent should be be able to discern which state their client is in. That way, they can be able to better tailor their services to meet the ever growing needs of their clientele. Ultimately, the top performing agents grow their book by referral, repeat and word-of-mouth. Of course, having a great online reputation, and brand, sure help along those lines.
Want to know more about how you can effectively market your insurance agency? ABS is here to help. You can call us toll FREE at: 1-888-776-7761 or book a FREE marketing and branding analysis today at: www.AgentBrandingsystem.com.